Nicholas Taleb said recently that the bankers “hijacked the American economy,” and should not have received $2.2 trillion bonus payouts they did. Taleb lamented:
“Unfortunately, we don’t have claw backs in the U.S.”
I’ve previously argued that the government could use existing laws to force ill-gotten gains to be disgorged (see this and this), fraudulent transfers to be voided and – perhaps – even bonuses gained at the expense of taxpayers clawed back.
To find out whether or not Taleb is right, I spoke with the country’s top white collar crime expert – who put over 1,000 top S&L executives in jail for fraud (professor of law and economics Bill Black).
I asked Professor Black what, exactly, current fraud laws allow to be disgorged. For example, I asked Black whether or not bonuses given out based on fraudulent Ponzi schemes and manipulation of a company’s accounting books could be disgorged. And I asked hims to estimate how much could – hypothetically, if prosecutors and judges did their job – collectively be recouped for the American people?
Professor Black informed me that the proceeds of fraud can be recovered, including bonuses earned through fraudulent activity.
He said that the amount which could be recouped could amount to tens of billions of dollars per prosecution, if the evidence of wrongdoing was there.
Ten billion here and ten billion there could add up to some real money. Prosecuting fraud and recovering ill-gotten games could make the giant banks whose very size is ruining the economy (what Black calls “Systemically Dangerous Institutions” or SDIs) a little smaller, and to help pay down our national debt a little bit in the process.
And because fraud caused the Great Depression and the current economic crisis, and the economy cannot stabilize until the rule of law is restored, and criminal fraud on Wall Street is prosecuted, suing to recoup criminally-gotten gains is the best thing we can do for our economy.
And since rampant inequality leads to unstable economies and depressions, recouping some of the ill-gotten gains from the Wall Street fraudsters will help reduce inequality without raising taxes.
Help us Prepare for Trump’s Day One
Trump is busy getting ready for Day One of his presidency – but so is Truthout.
Trump has made it no secret that he is planning a demolition-style attack on both specific communities and democracy as a whole, beginning on his first day in office. With over 25 executive orders and directives queued up for January 20, he’s promised to “launch the largest deportation program in American history,” roll back anti-discrimination protections for transgender students, and implement a “drill, drill, drill” approach to ramp up oil and gas extraction.
Organizations like Truthout are also being threatened by legislation like HR 9495, the “nonprofit killer bill” that would allow the Treasury Secretary to declare any nonprofit a “terrorist-supporting organization” and strip its tax-exempt status without due process. Progressive media like Truthout that has courageously focused on reporting on Israel’s genocide in Gaza are in the bill’s crosshairs.
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We’re preparing right now for Trump’s Day One: building a brave coalition of movement media; reaching out to the activists, academics, and thinkers we trust to shine a light on the inner workings of authoritarianism; and planning to use journalism as a tool to equip movements to protect the people, lands, and principles most vulnerable to Trump’s destruction.
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